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Leaders Losing Steam Amidst Choppy Trading Conditions

The trader with the first and second largest currency trading portfolio balances moved up the ranks on Friday for one simple reason: he just didn’t lose money. The leader has made over $160,000 in each of his portfolios since the start of the contest by trading primarily the British pound and the euro. On Friday, he tried his hand at USD/CAD, as he sold the pair in the morning after it rebounded to a high of 1.0190, but exited the position this morning with very small profits.

Indeed, USD/CAD jumped on Friday despite the fact that headline Canadian retail sales rose in line with expectations by 0.6 percent on the back of gasoline station and clothing purchases. Meanwhile, excluding autos, retail sales rocketed 1.1 percent higher, marking the biggest gain in five months. It is worth noting that these indexes are not adjusted for inflation, so the surge in gasoline prices during the survey period was likely a major driver of the rise in gas station sales. Nevertheless, the broad rise in most of the components (only auto and building supply sales fell) bodes well for domestic demand, as consumption appears to be holding up well. Furthermore, with the Bank of Canada becoming increasingly concerned about rising price pressures, indications of an improvement in spending will be a sign of additional upside inflation risks. As a result, there is greater potential that the central bank will consider raising rates this year.

Meanwhile, our third place contestant’s profits of over $155,000 since the start of the contest are nothing to scoff at, but his strategy of scalping EUR/USD didn’t work so well on Friday as he lost approximately $900 on a total of 52 different trades. However, it appears that he’s trying a more slow-and-steady approach. At the time of writing, he has only executed 3 EUR/USD trades as the pair consolidates below 1.55 after plunging over the course of the European trading session.

In fact, EUR/USD is down well over 100 pips from Friday’s close as weaker-than-expected European economic indicators weighed the pair down. More specifically, the German IFO survey reflected more pessimistic sentiment amongst businesses while the purchasing managers’ index for the Euro-zone services sector fell below 50, signaling a contraction in business activity. Clearly, rocketing energy and food prices along with the prospect of rate hike by the European Central Bank next month is taking a toll on businesses and consumers alike, and as a result, the downside risks for expansion in the Euro-zone are quickly mounting.

Congratulations to our top traders and good luck!

Terri Belkas, Currency Analyst for DailyFX.com